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The two growth options that Arauco face have an added advantage of the market share and the economies of scale. However, considering the. Should the company go with an horizontal expansion and invest US$1 in pulp production by forward integrating into paper manufacturing?. This is a Spanish version. Celulosa Arauco is a major Chilean producer of market pulp and wood products. Owning over million hectares of forest in Chile.

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Arauco(a): Forward Integration or Horizontal Expansion. Essay

Forward Integration or Horizontal Expansion. Conclusion There is an obvious need for transformation in this company to protect its debt holders, shareholders, and employees. Eventually there will be restrictions placed on these companies causing them to rely solely on their plantations. The slow inventory production and turnover could cause significant problems for Celulosa-Arauco. Celulosa-Arauco should seek to limit risks that they have incurred by operating in a better planned and more organized manner.

This is evident from the increase in educational spending but lack of functional computer software for students. We will write a custom essay sample on Arauco a: The fact that Chinese characters are not standardized across the different provinces should also add to a long-term consumption of paper.


Cutting the current dividend and transforming the company into lean, efficient, well-managed segments with appropriate oversight is crucial at this point.

Here are possible transformations that Arauco could proceed with: Second, Celulosa-Arauco can proceed by changing operations.

One alternative to proceed with this transformation would be to migrate out of the political and legal pressures. Celulosa-Arauco can explore diversifying their operations to other countries, possibly those with more stable political policy.

Such a migration requires logistical concerns and expenses. In order for Celulosa Arauco to sustain success or even thrive in this changing market, it would have to undergo a transformation.

Arauco (A): Forward Integration or Horizontal Expansion? | The Case Centre

Forestry operations, although still a sustainable market, is undergoing greater scrutiny due to raising environmental concerns. Celulosa-Arauco would not be able to sustain success if they continue to just suspend or close saw mills as that results in loss of profits and investment. Forward Integration or Horizontal Expansion? Porter and Jan W. By clicking “SEND”, you agree to our terms of service and privacy policy.


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Arauco (A): Forward Integration or Horizontal Expansion?

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